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SUGARMADE, INC. FILES (8-K) Disclosing Regulation FD Disclosure

Edgar Glimpses |
Tuesday, 01 July 2014 17:19 (EST)

Item 7.01 Regulation FD Disclosure

On June 30, 2014, Sugarmade, Inc. (the "Company") determined that it did not
have adequate support from convertible note holders and certain creditors to
proceed with the proposed acquisition of SWC Group, Inc., a California
Corporation dba CarryOutSupplies.com ("CarryOut"), a producer and wholesaler and
custom printed and generic takeout supplies (the "Acquisition"). The closing of
the Acquisition had been intended for July 9, 2014.

The proposed Acquisition was announced on the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission on June 4, 2014.

CarryOut, which services the more than 3,000 takeout establishments,
restaurants and other food service operators is headquartered at 167 N Sunset
Ave, City of Industry, CA 91744, with two additional warehouse locations in
Southern California. During 2013, CarryOut had revenues of in excess of $9
million according to preliminary due diligence completed by the Company. The
respective management teams believe the combined entity will be capable of
significantly growing this revenue over future periods by better utilizing
salesforce resources, enhancing working capital in order to allow better
customer terms for payment, and by expanding product lines. Each of the
operators plan to immediately upon closure of the acquisition to begin
cross-selling the respective products with the corporate sales team of CarryOut
to mainly focus on small business and retail channels and a Company sales team
to mainly focused on sales of cut paper to major corporations and large
institutions that desire to lessen the environmental impact of corporate
operations.

The closing of the Acquisition is contingent on the following, in addition to
other items: 1) Modification to the terms of outstanding Company notes, 2)
Modification to the terms of outstanding CarryOut notes, 3) Settlement of
material Company debts, 4) The closing of not less than $500,000 of financing,
5) Execution of definitive agreements, 6) Approval of the respective boards of
directors and stockholders, and 7) Satisfactory completion of due diligence and
financial review of CarryOut.

The Board of Directors of the Company believes that the concessions requested of
the note holders and the settlement terms offered to the creditors are
reasonable and that the contemplated transaction of the proposed acquisition is
in the interest of its shareholders. However, without the modification to the
terms of outstanding Company notes finalized and fully executed by July 8, 2014
and/or without the material Company debts fully settled or resolved by July 8,
2014, the Company is not able to secure the financing required to move the
proposed Acquisition forward. In that case, the Company might be forced to
cease its operation on July 9, 2014 and liquidate, which would adversely affect
the Company's shareholders.

While the majority of note holders representing the vast majority of total note
value have agreed to extend the notes and change other conditions for conversion
and repayment, several note holders have not agreed. Additionally, while
creditors representing a majority of the money owed by the Company have agreed
to accept stock or a combination of cash and stock to release any potential
claim against the Company, several other creditors have not agreed. As a
consequence, the Company is not able to secure the financing required to move
the proposed Acquisition forward at this time. Therefore, at this time, the
Company is prepared to cease its operation on July 9, 2014 and liquidate.

This current report on Form 8-K contains "forward-looking statements" within the
meaning of the federal securities laws, which involve risks and uncertainties.
You can identify forward-looking statements because they contain words such as
"believes," "expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "estimates," or "anticipates" or similar expressions that
concern our strategy, plans or intentions. All statements we make relating to
the closing of the Acquisition and related transactions described in this
current report or to our estimated and projected earnings, margins, costs,
expenditures, cash flows, growth rates and financial results are forward-looking
statements. In addition, we, through our senior management, from time to time
make forward-looking public statements concerning our expected future operations
and performance and other developments. These forward-looking statements are
subject to risks and uncertainties that may change at any time, and, therefore,
our actual results may differ materially from those that we expected. We derive
many of our forward-looking statements from our operating budgets and forecasts,
which are based upon many detailed assumptions. While we believe that our
assumptions are reasonable, we caution that it is very difficult to predict the
impact of known factors, and, of course, it is impossible for us to anticipate
all factors that could affect our actual results.

Important factors that could cause actual results to differ materially from our
expectations ("cautionary statements") are more fully disclosed below under the
section headed "Risk Factors" in our Annual Report on Form 10-K, Quarterly
Reports on 10-Q and any subsequent filings with the Securities and Exchange
Commission. All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in
their entirety by the cautionary statements. We assume no obligation to update
any written or oral forward-looking statement made by us or on our behalf as a
result of new information, future events or other factors. There is no
assurance that any Acquisition or transactions will ultimately be consummated.

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